Comments on: Saving Beyond 401k and Roth IRA

By: Livingalmostlarge

Livingalmostlarge — Sun, 08 Apr 2007 02:21:52 +0000

Maybe he is supper happy. I feel the same way that we’re not saving enough, but it’s because we got a late start. Maybe this guy feels the same. Also by saving a lot now that we’ve started it’s easier to grow into our income. My learning how to save the maximum now we’re not getting use to the extra income.

By: MossySF

MossySF — Fri, 06 Apr 2007 18:20:05 +0000

If the glove fits…

95% of the comments here immediately said Norm needs to worry less about saving (e.g. spend more money) to enjoy life more. Huh, who do they know Norm isn’t enjoying life already? Basically, they immediately made a judgement that if Norm isn’t spending money, he must not be happy. If that’s not brainwashing from Madison Avenue, I don’t know what is.

By: Teri

Teri — Fri, 06 Apr 2007 17:40:05 +0000

I think certainly a lot of assumptions are being made. I grew up in the most expenive area of the country and out of school on 2-incomes we saved about 1/2 of a $95k salary and had plenty to enjoy. These days with 4 kids and insane health insurance I find it harder to stretch a dollar. But all the same time at $95k today I could certainly save $20k/year easy. Living in the middle of nowhere would just make it 10 times easier.

But I digress. A big thing missing from this discussion is the fact that being single on $95k is a huge tax burden. Has to be in the 25% tax rate (from knowledge gleamed) which means a $15k 401k contribution is saving him at least $3,750 in income taxes. Maybe more if there are state taxes. So he plops that money in a ROTH. If he is making $95k it means he really isn’t saving much more than 15% at face value, and just investing his tax savings to boot. More power to him.

I just have to say being very aggressive savers we have more assets (fun ones too), and work far less than our average 20-something comrades.

By: Sonya

Sonya — Fri, 06 Apr 2007 14:53:50 +0000

I read the Upgrave column and it seems he just assumes the young man wants to save for retirement. The puropse of his savings needs to be clarified. Does he want to retire at a very young age ? Save to purchace a home ? Save like mad now so if he marries in the future he can back off saving ? It is also never clear that he is single . Not enough information to tell.

By: Free Money Finance

Free Money Finance — Fri, 06 Apr 2007 10:20:12 +0000

Star Money Articles for the Week of April 2

Here are interesting posts and news this week from the MoneyBlogNetwork members and beyond: MightyBargainHunter tells of a man who bought a house by selling coins with errors. Five Cent Nickel lists the Roth IRA income limits for 2007. Blueprint

By: eROCK

eROCK — Thu, 05 Apr 2007 18:50:06 +0000

Quite the generalizations!

People enjoy a plethora of different activities and items. While you might enjoy volunteer work, others might enjoy exploring the World. Some people enjoy spending a day blowing a wad down on Madison Ave, while some might prefer helping the poor by serving them meals or repairing homes for the less fortunate.

No one is in a position to judge anyone else. Money is merely a tool and what you do with that tool is up to you.

Has nothing to do with brainwashing.

By: Tim

Tim — Tue, 03 Apr 2007 20:31:01 +0000

The biggest thing missing in this article and on everyone’s post is Norm’s retirement goal. You simply cannot give any advice on how much Norm ought to save or not save without it. What percentage of current standard of living does he want for retirement? remember that current standard of living includes saving x%, which presumably he will not be doing during retirement.

i agree balance. you budget and save in order to spend. if Norm can do everything that he wants to do in life saving 43%, then good for him. again, though, the important thing that is missing is his retirement goal.

By: pf101

pf101 — Tue, 03 Apr 2007 17:19:33 +0000

I agree. There has to be balance in your savings. Knowing the cost of living in Dumfries, his housing is probably pretty cheap (because it’s the middle of no where!) and being so far from DC he probably doesn’t go out in the city a lot. I would think it’s likely that he could save that much and still live a decent life, particularly if he purchased his house 5 or more years ago.

By: wanzman

wanzman — Tue, 03 Apr 2007 14:03:45 +0000

I agree. If I spend why whole life saving for retirement and being a tightwad, then when I get to retirement, will I really be able to start spending like crazy and enjoying what I have saved?? Not a chance. Both of my grandmothers have saved their whole lives, and are quite well off. But you would never know it by being around them. To their dying day, they will WORRY about every single penny that something costs.

It is all about striking a balance…

By: plonkee

plonkee — Tue, 03 Apr 2007 11:52:26 +0000

I agree that you need to look at the whole picture rather than just the savings totals. There is no point in saving a lot of money if you don’t know what you are going to do with it.

I don’t know whether Norm has considered his goals and aspirations or not, but there’s certainly something to be said for working out what you want to do in the next so many years before you are even allowed to take your retirement fund, and how you would like to pay for that.

By: MossySF

MossySF — Tue, 03 Apr 2007 11:09:15 +0000

You “enjoy life” people are completely brainwashed by Madison Avenue if you think money has anything to do it. Beyond basic needs, what makes people happy is family, social connections, meaningful work/goals/activities. I will submit that someone who spends their time in free/lowcost activities — example: volunteering for local charities/arts/environment/activism/etc, participating/building communities around common interests — will enjoy life far more than someone getting a phony high from buying a 50″ plasma.

By: Golbguru

Golbguru — Tue, 03 Apr 2007 06:41:20 +0000

I don’t know Norm’s age, but I have a question for him: Why does he want to save *so much* for retirement? Does he feel he is not contributing enough? or is he going to cash out with *early* (as early as permissible) retirement? or going to do something else with the money?

Student life has taught me how to live in $400 a month…and I could possibly extend that lifestyle for ever (inflation adjusted) even after I get a good-paying job….and sock the rest of my salary towards savings and retirement funds. That way I could have $10 million when I retire. But I have no idea what I will do with that kind of money when 2/3rd of my life is over.

On the other hand, I could save sensibly, and retire with just $5 million and use the *excess* cash (when I am young and when it matters the most) to buy a better house, in a better neighborhood, a better car, better education for my kids (and ensure that they are free of debt) and stuff like that.

I am not advocating a lavish lifestyle here, but some kind of a sensible balance. Personally, I feel that there are intangible costs associated with not using your money at the right time.

Bottomline: I agree with you Jim .. Norm needs a break if he is young and building his life. Of course, if he is deciding to retire very early with that kind of fund …then I support him.

By: Minimum Wage

Minimum Wage — Tue, 03 Apr 2007 06:14:31 +0000

He’s so rich because he works for the department of redundancy department.
———————————————————

Not only that, he’s double-dipping working for the Natural Guard – they’re gonna surround us!

By: Dong

Dong — Tue, 03 Apr 2007 01:59:18 +0000

We don’t know what Walt actually earns but I think it’s well within reason to max out the 401k, Roth, and contribute 1200 after tax and still have fun on 95,000 I’m on a similar budget, and still have plenty of fun. The critical factors are car, and housing. It’s really how much you save by never buying new car both in terms of purchase price, and auto insurance. The 2nd thing I’ve always lived in relatively modest place with roommates. By cutting those two things to manageable size, I’ve been able to vacation, and have fun the way I want to.

That said, I do think sometimes financial advisors shouldn’t focus so much on more savings for people who are already good savers, but focus them on thinking about what they are saving for. There are other goals other than retirment.

By: Doogan

Doogan — Tue, 03 Apr 2007 00:22:56 +0000

norm must sleep in a van down by the river and eat ramen noodles 3x per day. you simply can’t sock away that much coin on that salary and have an ounce of fun in your life.